Brokers back NZX over trading outages

By Nick Stride

Friday 12th March 2004

Sharebrokers are backing the New Zealand Exchange in a war of words with share registries.

The registries, which are paid by listed companies to maintain records of investors' shareholdings, are upset by the exchange's announcement it is setting up a clearing house to keep trading going when computer system glitches put registries offline.

The NZX tired of getting a bad rap for halting trading has decided enough is enough. "Media articles always blame us, but most trading halts are due to the registries," a source close to the NZX said.

Ironically this past Tuesday's "connectivity" issue that affected the trading of more than 70 NZX companies was Telecom's fault.

In the registries' defence, Computershare New Zealand managing director of registry Mike Smith said it wasn't necessary to close down trading simply because a registry was offline.

Sharebrokers knew their clients' holdings and rarely checked shareholdings before executing trades, he said.

Not so, sharebrokers say.

"I check all the time," ABN Amro Craigs director William Stevens said.

One reason was that holdings were affected by rights issues, bonus issues, buybacks and share splits that were difficult for clients to track. Another was to check clients had given correct shareholder and FINs (Faster identification numbers). "You don't want to be doing a trade twice."

Forsyth Barr chairman Eion Edgar agreed. "Our advisers are always checking the numbers."

A source close to the exchange said the two registries Computershare and BK Registries had it coming, as they were making a great deal of money but had not invested adequately in their systems.

Smith said that wasn't so in Computershare's case. "We've upgraded our hardware every couple of years and we've got backup machines and all the rest of it."

He acknowledged there was a worry the clearing house plan could end with the exchange setting up its own registry in competition with BK and Computershare.

Exchange chief information officer Chris Corke said that misconception might stem from an exchange briefing last December. "But that was said in a system integrity context, not in a commercial context."

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